House price growth in September fastest for seven years

A SURGE in house prices in September was the fastest rate of growth recorded for seven years, official figures show.

Figures show September's price increase was the fastest growth rate recorded for seven years

A leap of 12.1 per cent in the year to September added £28,000 to the value of an average home.

The rise puts the cost of a three bedroom semi at £273,000 - an increase of £2,333 a month.

That is the fastest rise since July 2007 and typical values are now 12 per cent higher than during the previous peak of the market in 2008, according to the Office for National Statistics.

For many of the UK's homeowners - including more than 11 million mortgage holders - the recovery has delivered a long awaited boost to their housing equity

Brian Murphy, MAB

The jump has also added an extra £30,000 of equity to properties, found research by the Mortgage Advice Bureau. Homeowners who remortgaged in October had £140,611 of equity on average compared with the same month last year when it was £111,783.

Brian Murphy, head of lending at MAB, said: "For many of the UK's homeowners - including more than 11 million mortgage holders - the recovery has delivered a long awaited boost to their housing equity.

"Recovering property values are giving many the leverage they need to negotiate a better mortgage deal with lower monthly repayments."

Some property experts also forecast further rises with 'plenty of momentum left in the market.'

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Swap rates - the cost of money borrowed by lenders - remain low and lenders are keen to make up for lost ground caused by implementing the Mortgage Market Review.

"As a consequence, there are some excellent fixed and tracker mortgage rates available and with the spring likely to be a challenge for the housing market ahead of the general election, lenders will continue offering fantastic deals to entice buyers and those remortgaging."

Toughened mortgage lending rules came into force across the industry in April under the Mortgage Market Review (MMR), which has caused some disruption to the market.

But in recent weeks, lenders have unleashed some of their lowest mortgage rates on to the market as they look to meet end-of-year targets.

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Andy Knee, chief executive of LMS legal services, added: "The ONS index appears to be following historical trends as recent price growth in the capital ripples out to the regions, leading to hefty price rises across the UK."

Values are continuing to rise through Britain with prices in London again showing the highest growth, the ONS report shows.

Prices in the capital have soared 18.8 per cent over the last year to reach £508,000 on average.

The East saw the next highest annual price growth, with values there lifting by 13.4 per cent over the 12 months, which is the strongest year-on-year increase seen in the East since August 2003.

On a monthly basis, prices across the UK increased by 0.5 per cent between August and September, which is a smaller uplift than a 0.8 per cent rise recorded in August.

Over the last year, prices have increased by 12.5 per cent in England to reach £285,000, by 5.8 per cent in Wales to reach £172,000, by 7.6 per cent in Scotland to reach £197,000, and by 10.9 per cent in Northern Ireland to reach £143,000.

While rising house prices are good news for those already on the property ladder, first-time buyers face having to pay 13.3% more to buy a home than they did a year ago.

This is the highest annual price increase for first-time buyers since March 2005 and leaves would-be FTBs now paying £209,000 on average.

Campbell Robb, chief executive of charity Shelter, said: "Average house prices in England are now almost 10 times the average wage.

"Even if they stop increasing at the astronomical rates we've seen over the past year, buying a home is still a pipe-dream for those on average incomes, who remain stuck in the 'rent trap', unable to save for a deposit."

Housing Minister Brandon Lewis said: "We've pulled out the stops and got Britain building, with planning permission granted for 230,000 homes across England in the last year and housebuilding levels now at their highest since 2007.